With its market capitalization surpassing $425 billion, Apple, Inc. recently became the largest corporation in the world, surpassing the energy giant Exxon.

Apple announced last month first-quarter earnings of $13.87 a share, setting new records and beating all analysts' expectations as a result of spectacular sales of 37 million iPhones, 15.4 iPads, and 5.2 million Macs during the last quarter of 2011.

Initially, one would think that the evolution of Apple, Inc., with its corporate headquarters in Cupertino, Calif., into a 21st century corporate behemoth is a very positive development not only for its shareholders, but for the American economy as a whole.

But it is not the case. Apple's hugely profitable business model has been premised on cheap foreign labor and materials found in China and its unregulated, highly adaptable and mobile high technological manufacturing base.

Over the last decade, Apple and its army of suppliers have created hundreds of thousands of middle class jobs in the communist Chinese state and will continue to manufacture its products there in the future, even as it continues to face mounting criticism for reportedly exploiting factory workers functioning in conditions that would not be condoned in the United States.

The flight of such middle class manufacturing jobs overseas is a major issue in any discussion of restarting our economy, particularly as the 2012 election campaign unfolds. There is an agreement among the GOP candidates that a reduction of the 35 percent corporate tax rate should be an important element of needed tax reform to bring these jobs back home.

However, there's no discussion, or more importantly criticism, of the "iPhone" model of multinational capitalism by the GOP candidates or President Obama that drives colossal, record profits made by concentrating manufacturing operations in China and other developing countries. Nor how multinationals like Apple ignore any sense of corporate social responsibility — or even patriotic duty — to employ American workers and contribute toward rebuilding the manufacturing sector of the U.S. economy.

Does Apple have any moral obligation to employ American workers? Economist Milton Friedman once argued that the one and only social obligation of a business is to use its resources and engage in activities designed to maximize profits — as long as it stays within rules of the game that guarantee free and open competition without deception or fraud.

The iPhone model of 21st century multinational capitalism does not work within Friedman's framework — it solely focuses on maximizing a company's profit for the benefit of the entity and its shareholders by exploiting cheap foreign labor in countries where there are no rules at all. It allows companies like Apple to operate unfettered by labor or antitrust laws in totalitarian societies like China that artificially create favorable export market conditions by manipulating its currency and that allow multinational corporations to supersize their profits by exploiting their workers and resources with official and moral immunity.

It's time for the United States to impose profit rules of the iPhone game. Any talk of federal tax reform, whether it is on corporate, capital gains, or income taxes, should revolve not around a standard tax cut for all multinationals, but around a new "carrot and stick" tax structure that rewards multinationals and their shareholders with lowered, or even eliminated taxes for creating or keeping manufacturing jobs in the United States.

Simultaneously, we need to impose tax costs that would reduce inflated profits made at the expense of the American economy in the form of higher corporate and capital gains taxes (and not in tariffs where the passed on costs would be borne by consumers) that makes it much less profitable for multinationals to sell goods and services manufactured overseas in their U.S. markets. Substantially raising such taxes on these entities and their shareholders, as well as eliminating all tax breaks and corporate tax exemptions that allow companies like GE from paying any US taxes at all, would be a good start.

Unlike many other Fortune 500 multinational companies who do a majority of their manufacturing offshore, Apple does pay its share of US corporate tax at a rate of 31 percent, a little less than the standard 35 percent rate.

Let's lower or eliminate Apple's Federal tax obligation. With $98 billion in cash reserves, let's encourage Apple to invest its profits in developing a U.S. manufacturing base and make up the cost difference in abandoning China with reduced taxes-or in the alternative, if they continue in China, just take back some of those decadent profits gained at an unjustifiable indecency and financial expense to the U.S. economy.